Yesterday Mark Carney, the governor of the Bank of England, suggested that interest rates, already at a historic low of 0.5%, will have to be cut further.

In a speech to the Greater Manchester Chamber of Commerce, Osborne said: “Now, as the governor of the Bank of England said yesterday, the referendum result is, as expected, likely to lead to a significant negative shock for the British economy. How we respond will determine the impact on people’s jobs and on economic growth.

“The Bank of England can support demand. The government must provide fiscal credibility, so we will continue to be tough on the deficit but we must be realistic about achieving a surplus by the end of this decade.”

John McDonnell, the shadow Labour chancellor, said: “The truth is as Labour consistently warned, George Osborne’s recovery built on sand was underpinned by a fiscal rule that is not robust or flexible enough to equip our economy for any potential shocks it may face.”

He called on the chancellor to release evidence passed to him by the Office for Budget Responsibility and said the chancellor should bring forward “shovel-ready projects” in deprived areas to support the economy.

(Image c. Stefan Rousseau from AP/ Press Association Images)

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editor's comment

Devolution, restructuring and widespread service reform: from a journalist’s perspective, it’s never been a more exciting time to report on the public sector. That’s why I could not be more thrilled to be taking over the reins at PSE at this key juncture.
There could not be a feature that more perfectly encapsulates this feeling of imminent change than the article James Palmer, mayor of Cambridgeshire and Peterborough, has penned for us on p28. In it, he highlights...read more >

last word

Rob Whiteman, CEO at the Chartered Institute of Public Finance (CIPFA), discusses the benefits of long-term preventative investment.
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